UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 15947 / October 27, 1998
SECURITIES AND EXCHANGE COMMISSION v. GOLDMAN LENDER & CO.
HOLDINGS, BLACKWELL CO., TRADERZ ASSOCIATES HOLDING INC.,
SHARON HAROSH and AMERICO ROBERT GALLO, 98 Civ. 7525
(S.D.N.Y.)(JGK)
NEW YORK-- The Securities and Exchange Commission filed an
action in federal court in Manhattan on October 23, 1998,
alleging that two individuals and three entities
fraudulently raised over $210,000 through a scheme involving
phony private placements of securities. According to the
Commission's Complaint, the defendants told investors that
they could purchase securities in the private placements of
three entities and in a few months the companies would go
public and the investors would double or triple their money.
The defendants also falsely told investors that investing in
the private placements involved low risk because the investors'
money would be kept in an escrow account at a law firm. In
fact, there was no escrow account and the two principals of
the three entities misappropriated a significant portion of
the investors' money.
Named in the Complaint were:
Americo Robert Gallo, age 32, the President of Traderz
Associates Holding Inc. ("Traderz Associates"), and a
resident of Brooklyn, New York;
Sharon Harosh, age 25, the President and Secretary of
Goldman Lender & Co. Holdings ("Goldman Lender") and the
sole proprietor of Blackwell Co. Harosh resides in
Brooklyn, New York;
Traderz Associates, a Delaware corporation whose principal
place of business was in New York City;
Goldman Lender, a Delaware corporation whose principal place
of business also was in New York City; and
Blackwell, a sole proprietorship owned by Sharon Harosh.
Blackwell's principal place of business was in New York
City.
The Commission's Complaint alleges that Gallo
telephoned investors and solicited them to purchase the
securities of Traderz Associates in a private placement.
The Complaint alleges that in those phone calls, Gallo made
misrepresentations to investors concerning, among other
things, the risk of investing in Traderz Associates
securities, the potential profit investors could expect to
make by purchasing Traderz Associates securities and the use
of investors' funds by Traderz Associates. In fact, Gallo
has misappropriated a significant portion of the offering
proceeds and has given other large sums to colleagues.
The Commission's Complaint also alleges that Harosh
used several fictitious names, or instructed his agents to
use fictitious names, in soliciting investors to purchase
the securities of Goldman Lender and Blackwell. Harosh, or
his unknown agents, made misrepresentations to investors
concerning, among other things, the risk of investing in the
securities of Goldman Lender and Blackwell, the potential
profit investors could expect to make by purchasing the
securities of Goldman Lender and Blackwell, the use of
investors funds by Goldman Lender and Blackwell and the
existence of Blackwell securities. Harosh ultimately
received all of the money that investors sent to Goldman
Lender and Blackwell and deposited those funds into various
bank accounts in the names of those entities. Shortly after
depositing the investors' funds, Harosh wired a significant
part of the funds to offshore bank accounts and also
withdrew in cash a significant part of the remaining
proceeds.
The investors in each of the three offerings have not
received any securities nor any confirmation of their
supposed purchases. The investors have never been refunded
their money.
In addition to the above-described violations, in July
1998, several of the investors who had purchased Goldman
Lender's securities were again solicited to purchase shares
in Ramtron International Corp. ("Ramtron"), a Delaware
corporation that designs, manufactures and sells
semiconductor memory chips. Ramtron's stock price is quoted
on the NASDAQ National Market System. Investors were told
that they could purchase shares of Ramtron at approximately
$2 per share and sell them later that same day through
Goldman Lender at approximately double the price. At least
two investors agreed to buy Ramtron stock and sent at least
$37,500 to Goldman Lender. These investors never received
any Ramtron shares nor did they receive confirmation that
they had purchased or sold shares of Ramtron stock. None of
these investors in Ramtron ever received back any of the
funds that they sent to Goldman Lender.
In its Complaint, the Commission alleges that the
defendants violated the antifraud provisions of the federal
securities laws -- Section 17(a) of the Securities Act of
1933 and Section 10(b) of the Securities Exchange Act of
1934 and Rule 10b-5 thereunder. The Commission is seeking
an asset freeze, an accounting of investors' money and a
temporary restraining order against all five defendants.
The Commission also seeks permanent injunctions against
future violations of the antifraud provisions, disgorgement
of defendants' ill-gotten gains plus prejudgment interest,
and civil penalties.